Reaching FINANCIAL FREEDOM in 7 Steps, with Joshua Sheats | Afford Anything Podcast (Ep. #39) finance podcast

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It’s tempting to think of “financial independence” as a finish line. You’ve either crossed the finish line, or you’re still running the race.

But financial independence is more nuanced, says today’s guest, Joshua Sheats.

We experience seven stages of financial independence, Joshua says, and we should break down our Major Goal — financial independence — into a series of smaller steps.

Joshua, a financial planner and host of the hit podcast Radical Personal Finance, describes these seven stages in today’s show, offering tips about how to reach each one.

Here’s a sneak peek:

Stage 0 – Total Financial Dependence. Everyone starts here. When you’re a child, for example, you’re dependent on grown-ups.

Stage 1 – Financial Solvency. You can support yourself, without help or handouts from others, and you’re current on your bills.

(Many people think that financial management stops at Stage 1. Our guest Evelyn Connors describes the mindset behind this misconception in Episode 28 —

Stage 2 – Financial Stability. You can support yourself, your bills are current, and you hold some savings.

Stage 3 – Debt Freedom. You’re debt-free, in addition to the points above. It’s your choice whether or not you want to include your mortgage within this definition. (Joshua elaborates on debt paydown during Episode 32 of his show.)

Stage 4 – Financial Security. You have enough investment income to cover basic, bare-bones living costs.

Stage 5 – Financial Independence. You have enough investment income to cover your current lifestyle.

Stage 6 – Financial Freedom. – You have enough investment income to cover BIG dreams and upgrade your lifestyle.

Stage 7 – Financial Abundance. – You have enough investment income that you cannot possibly spend this money. Vast amounts of your money will outlive you, and your focus is wise stewardship of this wealth so that you can leave a beautiful legacy.

(We touched on these seven stages briefly in our interview with J.D. Roth during Episode 20, but we dive deeper into these stages on today’s show.)

How do you traverse these seven stages? And how can you enjoy life while you’re along the journey?

Find out in this thoughtful interview with Joshua Sheats.

— Paula

P.S. About 2/3rds through the episode, listen for Joshua’s startling, counterintuitive advice about contributing to your 401k!

Joshua elaborates more on this during Episode 314 of his show.

________
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#affordanything #financialindependence .

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22 comments

Prasendi Prasendi 28/02/2022 - 8:41 Chiều

Menit 27 sampai 31 tentang pentingnya punya uang cash dan tidak menginvestasikan semua

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Purushottam Sharma 28/02/2022 - 8:41 Chiều

Thank you for financial advice I am from India Darjeeling listening from you.

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T.H. Nguyen 28/02/2022 - 8:41 Chiều

Love the interview! I love the number crunching at 59:00 time stamp regarding the Roth IRA. Excellent interview!

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sinatra187 28/02/2022 - 8:41 Chiều

What I love about this podcast is not only the guests and contents but the questions asked. Keep up the great work

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XXL Albatross 28/02/2022 - 8:41 Chiều

I'm from Sweden and so far I've listened to this interesting interview more than 20 times.

Greetings from Scandinavia.

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Michael Swaim 28/02/2022 - 8:41 Chiều

Wow. Powerful. Especially loved the discussion of the tax implications of Roth vs Traditional IRA. The notion that you’ll be in a lower tax bracket, or even the same, upon retirement is suspect given today’s environment.

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Mech D 28/02/2022 - 8:41 Chiều

The hostess voice tastes like silk in my ears

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Cande Carroll 28/02/2022 - 8:41 Chiều

I am 73, living from my isocial security, and my investments: monthly income from a personal loan of $280,000, and real estate LLC investments of $430,000.

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Image Advisors International 28/02/2022 - 8:41 Chiều Reply
vulpixelful 28/02/2022 - 8:41 Chiều

"Leisurely morning with the kids" that's a man's description alright

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Tony Jhang 28/02/2022 - 8:41 Chiều

Living outside of the US without being a tax resident anywhere- flat $0 income tax making $120,000 a year.

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Manish Kothule 28/02/2022 - 8:41 Chiều

Really nice, details one, good one

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The Upgrade 28/02/2022 - 8:41 Chiều

Life changed ❤️❤️❤️ great interview

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Sara Rush 28/02/2022 - 8:41 Chiều

Can’t find his app. Anyone know if there is anywhere I can find his content?

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Ntuthuko Ngema 28/02/2022 - 8:41 Chiều

Thank you for this.

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Mark Cuckerberg 28/02/2022 - 8:41 Chiều

Bulking up my savings so I can invest on the lows. I’m also an emotional saver who requires a large emergency fund. This is the first time I have ever heard a financial advisor say that having a substantial savings hedges panicking selling on lows and selling for lifestyle changes. Great stuff!!! Keeping a savings frees you up for an abundance mindset and not a scarcity mindset.

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Colin Pritchard 28/02/2022 - 8:41 Chiều

Stage 0 – Total Financial Dependence.
Stage 1 – Financial Solvency.
Stage 2 – Financial Stability.
Stage 3 – Debt Freedom.
Stage 4 – Financial Security.
Stage 5 – Financial Independence.
Stage 6 – Financial Freedom.
Stage 7 – Financial Abundance

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Darby O'Hara 28/02/2022 - 8:41 Chiều

The story about the couple with 100k in checking is just stupid. Money management is based on numbers and data more than feelings. Earning little to no interest is foolish. The correct advice is to compromise for both and split the difference and leave 50k in and invest the other 50k.

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Yashodhan Phatak 28/02/2022 - 8:41 Chiều

Regarding the traditional vs roth, I think roth is a better choice when withdrawals are considered. In traditional one has to withdraw more to pay the taxes owed vs roth one can withdraw the amount needed. In case of roth more money will be preserved in the retirement account during withdrawal and it can keep growing with compounding effect. Only exception to this would be one is withdrawing the amount upto standard deduction and not paying any taxes. Given that I also agree with Joshua's point that contributions to roth means less money available to you currently and that could lead to stiffer lifestyle choices.

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Kristal Adcock 28/02/2022 - 8:41 Chiều

Came here because I ran out of madfientist and mmm episodes .. not disappointed.

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Joseph R 28/02/2022 - 8:41 Chiều

This guy is dishonest. "Recognize you're going to have far more money than you need. Make sure you're prepared for it." This is true for almost no one. This was a complete waste of time! At least you got a comment out of it and a thumbs down.

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Aek Sinsang 28/02/2022 - 8:41 Chiều

Great- but my personal favorite is JL Collins: simple practical and low maintenance with following 3 core principles

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